Towering cranes dot the Havana skyline as communist-run Cuba races to
build luxury hotels, amid indignation among some residents and concern
that U.S. President Donald Trump might reverse a detente that fueled the
tourist boom.

Swiss-based Kempinski Hotels SA will inaugurate its Gran Hotel Manzana
in the heart of the capital on Wednesday, billing it as Cuba’s first
true luxury hotel.

The five-star property, managed by Kempinski but owned by the Cuban
government, occupies the top floors of a renovated Belle Epoque shopping
mall filled with glitzy Gucci and Montblanc stores.

Farther down the iconic Paseo de Prado boulevard toward the Caribbean
Sea, workers are developing two other sites into luxury hotels to be
operated respectively by Spain’s Iberostar and France’s Accor SA
ACCP.SA, the largest hotel group in Europe.

Tourism is the one bright spot in Cuba’s moribund economy, which is
struggling with falling exports and upheaval in major trade partner
Venezuela.

Cuban Tourism minister Manuel Marrero said in May that more than 4.2
million tourists were expected this year, up from 4 million in 2016. He
said the country was adding 2,000 hotel rooms a year to its stock of
65,000 hotel rooms and 21,000 homes renting to tourists.

Visits by Americans have soared since U.S.-operated cruises and
scheduled flights were relaunched last year as part of the detente
pursued by former President Barack Obama after a half-century hiatus.

However, his successor Trump is considering tightening those rules when
he announces his Cuba policy as soon as this month, according to current
and former U.S. officials and people familiar with the discussions. That
would likely hurt tourism, at least in the short run, and might slow the
pace of hotel construction.

“We hope that trade and travel restrictions eased by the Obama
administration will not be tightened again by the current U.S.
government,” said Alessandro Benedetti, a marketing director at Kempinski.

“That would not be favorable for any kind of businesses connected to
tourism, such as cruise ship operators, airlines or hotel chains.”

The Cuban government has courted foreign hotel operators to develop
untapped markets, particularly in high-end tourism.

With its gleaming white stone facade and French bay windows, the Gran
Hotel Manzana features a rooftop infinity pool overlooking Havana’s
central park, as well as a spa with steamroom and sauna. There is also a
cigar lounge with a tobacco sommelier.

Industry experts say Cuba, which offers a plethora of low- and mid-range
accommodation, is right to bet on luxury, although it will be a
challenge for operators to maintain standards in a tightly controlled
Soviet-style economy.

“We have travel agencies contact us saying they had never worked with
Cuba because it didn’t offer anything up to their standards,” said
Benedetti.

“But now that’s changed,” he said, citing strong interest from U.S.
tourists seeking more luxurious destinations.

CUBANS HAVE MIXED FEELINGS

It remains unclear how far Trump will go in rolling back Obama’s
changes. Any reinstatement of U.S. restrictions on Cuba travel would
face criticism from American travel companies as well as a growing
number of U.S. lawmakers.

The number of U.S. visitors rose 74 percent last year, but Americans are
still not officially allowed to visit as tourists. Because their trips
must fit certain categories, like educational travel, most descend on
Havana rather than the coastal resorts.

While Cuba has been building resorts around the island, it has redoubled
its focus on the capital, where hotels are fully booked year-round and
demand is growing.

“With this increase, it would be appropriate to have products of high
standard,” said Francisco Camps, Cuba deputy general manager for Spain’s
Meliá Hotels International S.A. (MEL.MC), which wants to introduce its
two main luxury brands.

Despite assurances tourism revenues will benefit all Cubans, the move
has stirred mixed feelings in a country that prides itself on social
equality.

“The hotels are very pretty, but they are too expensive for Cubans,”
said retiree Antonio Cazamayor, who lives on a monthly pension of $10.

Rooms at the Gran Hotel Manzana will range from $360 for a low-season
double to $5,000 for the 150-square-meter (1,600-square-foot)
presidential suite.

Cazamayor’s home in the densely populated back streets of central Havana
is just a few blocks from the hotels but feels like a different world.

His building appears derelict from the outside, with the ground-floor
windows boarded up, but inside it teems with families packed into tiny
units.

Many neighborhood buildings, which date to the 1920s and 1930s, are
missing walls or balconies. Collapses are common. An apartment block in
front of Cazamayor’s was recently evacuated after its stairwell caved in.

“If that one collapsed, and this one is falling apart, why don’t they
build homes?” Cazamayor asked.

Hobbled by an inefficient, centrally planned economy and a U.S. economic
embargo, Cuba has struggled to maintain its infrastructure in a
punishing tropical climate.

Since the country opened up to tourism in the 1990s after the fall of
the Soviet Union, Havana reinvested much of its revenue in renovating
historic buildings, from Art Deco hotels to colonial palaces.

“They have returned the sparkle to part of Old Havana,” said Abraham
Rodriguez, 45. He attended a school in the building that now houses the
Gran Hotel Manzana and recalls how the classrooms flooded when it rained.

But much of the rest of the city is still falling into ruin.

Cubans working in the private sector as restaurateurs, taxi drivers and
tour guides say the arrival of Kempinski and its rivals spells good
business for them.

Yet the benefits for the more than two-thirds of the government
employees are less obvious.

Josefa Cespedes, 73, has been living for a quarter-century in a building
that houses a unit of the Communist Party charged with keeping tabs on
the neighborhood because her home collapsed.

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